If you are too overwhelmed by your debt and always getting calls from companies, it can be a good idea to consolidate your debt. But just like anything big, relieving yourself of serious debt never happens fast. This will occur over time, so you must be smart in your planning. The information that follows should help you make good choices when you’re considering consolidation.
When considering what options are available to you with debt consolidation services, avoid the assumption that anyone advertising themselves as non-profit is automatically trustworthy or affordable. Even scammers will use this term to try to suck you into their web with loan commitments and interest rates that are way too high. The BBB can help you find a reputable company or you can ask friends and family who are satisfied customers of their debt consolidation company.
Before you make any decisions, study your credit report. To prevent the same mistakes in the future, you need to consider why you made them and how they affected you. Checking all three reports regularly can keep you from disastrous financial choices once your debt is consolidated.
Are you on life insurance? It is possible to cash that in and then take care of your debts. Talk to your insurance agent for more information. In some cases, you get to borrow some of your policy investment in order to pay current debt.
Just because a company calls itself nonprofit doesn’t mean they are completely trustworthy and will be fair in their service charges for debt consolidation. The terminology is frequently used to disguise predatory entities that offer unfavorable interest rates and conditions. Try to seek out a personal recommendation or look up companies on the BBB website.
Filing for bankruptcy is an option you should explore. A bankruptcy, whether Chapter 7 or 13, leaves a bad mark on your credit. But, if you have no way to pay down your debts and you’re missing payments, your credit could be irreparable already. A bankruptcy filing will help you reduce debt and regain financial control.
Are the counselors at your debt consolidation company fully certified? Do they have certification by specific organizations? Are they backed by places that are reputable so they can be trusted and are strongly backed? This is the best way to determine whether or not you should deal with a company.
When searching around for a debt consolidation loan, look for one that offers a fixed rate that is low. A loan without a fixed rate may leave you wondering how much you owe each month. Your loan should end up improving your financial situation with positive loan terms and a fixed rate.
Do you hold a life insurance policy? If you really need to pay off some debt, consider cashing in the policy. Get in touch with your insurance agent and determine the amount of money you can obtain against your policy. Sometimes you’re able to borrow some of what you’ve paid in.
When consolidating, think about what caused this to begin with. The last thing you want is to repeat the behavior that got you into this mess. Be honest with yourself about how this all happened.
Let your creditors know if you’re working with a credit counselor or debt consolidation agency. If you do, they can offer alternative options to pay off your debt. Unless you tell them, they won’t know that you’re working with someone else. If they know you’re trying to get debts paid off they could be willing to assist you.
Try to use a loan to clear off the debts that you have. Creditors often knock off a large percentage of the debt in order to receive a lump sum payment. This can actually help your credit score.
If you are homeowner, you can refinance your mortgage and use the extra cash to pay off your other loans. When mortgage rates are low, you can use this method to consolidate your debt. In addition, you may discover that your monthly mortgage payment is lower than you believed.
You may be able to pay off your high interest credit cards by drawing some money from your 401K or retirement fund. Only do this if you can afford to pay it back within five years. If you are unable to, you may have to pay a penalty fee or taxes.
It is possible to take money out of retirement to pay a particularly draining debt. This shouldn’t be done unless you’re sure that this money can be paid back into your account. If you do not pay the amount back, you will be charged a penalty and will be required to pay income taxes on the amount.
When you are pursuing debt consolidation, you need to determine which ones are worth including and which ones should be left out. It’s not smart to consolidate loans that have a lower interest rate than that of the debt consolidation loan. Walk through each loan you currently have with your lender to make sure you are making smart decisions.
Consumer Credit
Debt consolidators need to use personalized methods. A professional who presents you with a few options without taking the time to learn anything about your situation is not a good choice. Your counselor should take the necessary time to offer you a personalized plan.
Try finding a good consumer credit counselling office in your area. These agencies will help you get a handle on your debt while combining everything into one manageable monthly payment. Using a debt consolidation counselor may hurt your credit score, but going through your local consumer credit counselor will have less of a negative impact.
See if the debt consolidator will customize payment programs. Some companies use a method that is the same for every customer, but everyone has different needs so be sure they offer you options. A better option is a company that uses individualized payment plans. While these can sometimes be a bit more expensive to start with, the long term savings are worth the initial investment.
You may just find that debt consolidation will let you manage your debt, as long as you know exactly what it can do for you. You cannot simply get on the phone and start talking unless you acquire some knowledge first. The article you have just read has provided you with some excellent strategies to resolve your debt. However, you must be the one to make the decision to implement them and do it.
Any time you have questions about your debt consolidation plan, make sure to contact the company you’re working with. You should be able to voice concerns and ask questions, even if an agreement has already been made. Ensure this company has an excellent customer service center who will always answer any questions or concerns you have.
